Federal Reserve Chairman Ben S. Bernanke defended the central bank’s record stimulus program under questioning from lawmakers, telling them that ending it prematurely would endanger a recovery hampered by high unemployment and government spending cuts.
“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further,” Bernanke said today in testimony to the Joint Economic Committee of Congress in Washington.
Bernanke lamented the human and economic costs of an unemployment rate at 7.5 percent nearly four years into the recovery from the deepest recession since the Great Depression, and said the Fed’s easing is providing “significant benefits.” His comments echoed remarks by William C. Dudley, president of the Federal Reserve Bank of New York, who said in an interview that it would take three to four months before policy makers will know whether a sustainable recovery is in place.
You have to ask yourself this question. What recovery is he talking about? I thank U.A.E. reader Laurent-Patrick Gally for sending me this Bloomberg story yesterday.
Federal Reserve Bank of New York President William C. Dudley said policy makers will know in three to four months whether the economy is healthy enough to overcome federal budget cuts and allow the central bank to begin reducing record stimulus.
“I don’t really understand very well how the tug-of-war between the fiscal drag and the improving economy are going to sort of work their way out,” Dudley said in an interview with Michael McKee airing on Bloomberg Television. “Three or four months from now I think you’re going to have a much better sense of, is the economy healthy enough to overcome the fiscal drag or not.”
Dudley’s remarks underscore that Fed officials have yet to reach consensus on when or how to dial back their $85 billion monthly bond-purchase program designed to spur growth and lower unemployment. Philadelphia Fed President Charles Plosser has called for reducing stimulus at the Fed’s next meeting in June, while St. Louis’s James Bullard said Tuesday the purchases should continue.
Why does anyone pays attention to these guys? It's print...or die...and a couple of more months ain't going to make any difference, as they're still going to print. This moneynews.com article from yesterday was sent to me by West Virginia reader Elliot Simon.
This 7:28 minute video with Jim Grant and Maria Bartiromo was posted on the CNBC website yesterday afternoon just after the markets closed. It's a must watch for sure...as James rips the Fed a new one...and I thank I thank reader Joseph Kahan for sharing it with us.
Applications for U.S. home mortgages dropped for a second week in a row last week as a spike in interest rates stymied demand for refinancing, data from an industry group showed on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, tumbled 9.8 percent in the week ended May 17.
The index of refinancing applications slumped 11.7 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell 3 percent.
This very short Thomson/Reuters story appeared on the moneynews.com Internet site very early yesterday morning EDT...and is worth skimming. I thank Elliot Simon for his second offering in today's column.
A top IRS official in the division that reviews nonprofit groups will invoke the 5th Amendment and refuse to answer questions before a House committee investigating the agency’s improper screening of conservative nonprofit groups.
Lois Lerner, the head of the exempt organizations division of the IRS, won’t answer questions about what she knew about the improper screening — or why she didn’t disclose it to Congress, according to a letter from her defense lawyer, William W. Taylor III. Lerner was scheduled to appear before the House Oversight Committee on Wednesday.
“She has not committed any crime or made any misrepresentation but under the circumstances she has no choice but to take this course,” said a letter by Taylor to committee Chairman Darrell Issa (R-Vista). The letter, sent Monday, was obtained Tuesday by the Los Angeles Times.
This story appeared on the L.A. Times website early on Tuesday afternoon PDT...and I found it in yesterday's edition of the King Report.
The latest poll of Morgan Stanley's top clients from across the world says it all.
Chief economist Joachim Fels tells us that not a single investor at the bank's Florence forum thought the world economy would rebound with any strength later this year.
Just a quarter expect a return to trend growth. Some 57pc think there will be no escape from the "twilight" conditions afflicting the western world, and 20pc expect an full-blown global recession. That is a remarkably bearish set of views. Yet the same investors are overwhelmingly bullish on stocks and property.
This schizophrenic exuberance seems entirely based on the assumption that QE and central bank largesse will keep the game going, flooding asset markets with liquidity. Indeed, 80pc think the ECB will cut rates again, and half think it will have to swallow its pride and join the QE club in the end.
Great shades of 1929! Party on, dude! This must read commentary by Ambrose Evans-Pritchard was posted on the telegraph.co.uk Internet site on Tuesday...and I thank Roy Stephens for bringing it to our attention.
Europe edged closer to lifting banking secrecy on Wednesday after Austria said it was ready to share data on foreign depositors but Vienna's support could fade should efforts to strike a similar deal with Switzerland fail.
Austria's dropping of objections allowed EU leaders to commit to an exchange of bank information between countries by the end of the year, as cash-strapped states seek to stop tax evasion and close loopholes highlighted by Apple Inc's use of a base in Ireland.
"It's a bad day for tax cheats," Austrian Chancellor Werner Faymann told reporters at a meeting of EU leaders to discuss fighting tax fraud by lifting bank secrecy.
"I believe we will manage the exchange of data by the end of the year," he said, adding later that although he was watching negotiations on a similar deal with Switzerland, Austria was in "full agreement".
This Reuters article was filed from Brussels...and posted on their website mid-afternoon on Wednesday...and it's another offering from Laurent-Patrick Gally.
Asian stocks took a beating Thursday as data showing that Chinese manufacturing activity unexpectedly contracted in May exacerbated early losses recorded on worries the Federal Reserve could downscale its bond purchases.
Japanese shares suffered the most, with the Nikkei Stock Average swinging spectacularly to plunge more than 4% in the afternoon session from a 2% rise posted earlier in the day.
The benchmark, which had ended at multiyear highs in each of the previous four sessions, was down 4.1% in highly volatile late-afternoon trade.
The Nikkei Average’s more-than-6-point intraday reversal coincided with a surge in Japanese government bond yields that forced the Bank of Japan to offer 2 trillion yen ($19 billion) in funds to calm investor nerves. The central bank announced the fund-supplying operation after 10-year JGB yields soared to their highest level in more than a year, citing “the unreasonable increase” in volatility.
This marketwatch.com story, filed from Hong Kong, was posted on their website in the wee hours of this morning EDT. It's worth your time...and I thank reader 'David in California' for finding it for us.
The first interview is with Michael Pento...and it's headlined "Fed Lies and Propaganda Won't Stop Gold and Silver Rise". Next is this commentary by Citi analyst Tom Fitzpatrick "Gold to Advance a Stunning $2,000+ From Current Levels". Here's a blog with Robert Fitzwilson. It's entitled "The Fed Destruction and a Cascading Panic Among Investors". And lastly is this interview with Dan Norcini...and it bears the headline "Incredibly Important Developments in Many Key Markets".
Four silver sets from the United States Mint are slated to be reduced in price according to a memo from the bureau.
According to the U.S. Mint, the 2012 and 2013 US Mint America the Beautiful Quarters Silver Proof Set, the 2013 US Mint Silver Proof Set, and the 2013 US Mint Congratulations Set will all be re-priced. Effective date for the change is not yet known, though it could happen on Wednesday.
This short article was posted on the silvercoinstoday.com Internet site on Tuesday...and I thank Marshall Angeles for sending it.
London-listed gold producer Petropavlovsk has said it will pre-sell 55pc of its future output planned for the second quarter of 2014, at an average price of $1,408 an ounce. This is the first time that a big producer has hedged more than half its future sales.
“We have a huge investment programme and thought a little price protection in the short-term will let us sleep better at night,” said chairman Peter Hambro.
“It was hedging that killed gold prices the 1990s,” said Ross Norman from Sharps Pixley. “Every time there was rally, the producers seized on the chance to sell forward. It was most unhelpful.”
Mr. Norman said it was the unwinding of hedge books a decade ago that unleashed the bull market. This process could now go into reverse if hedging spreads. "We don't think it will. The forces that led to the bull market will prevail," he said.
The forward sale is for only three months...and Ross Norman has it exactly right. Except for project financing, no miner is going to put their head back in that particular lion's mouth ever again. This Ambrose-Evans Pritchard offering was posted on The Telegraph's website early yesterday evening BST...and it's Roy Stephens second and final offering in today's column.
During the third week of May each year, representatives of the platinum industry gather in London, for an event that has become known as ‘Platinum Week’. Platinum Week centers on an industry dinner sponsored by the London Platinum and Palladium Market (LPPM) which marks the anniversary of the inauguration of the London Platinum Quotation (the forerunner of the present London Fixings) in 1973.
This event is attended by platinum group metals (PGM) producers, refiners, fabricators and traders. The first major event of the week is the publication of Johnson Matthey’s annual review of supply and demand for the PGM markets.
According to Johnson Matthey, the platinum market was in deficit by 375,000 ounces in 2012, close to their forecast made last November. The palladium market was also undersupplied but by a much larger margin of more than 1 million ounces.
This commentary by David Franklin over at Sprott Asset Management is a must read.
Sprott Silver Equities Class Co-Manager Maria Smirnova understands the power of leverage. She has seen the big impact even a slight increase in the silver price can have on silver producers. Every cent is multiplied and goes right to the investor's bottom line, giving the equities more upside than possible in a coin. That is why Eric Sprott increased holdings of silver equities in certain Sprott funds. Smirnova discusses five of these companies in this interview with The Gold Report.
This interview was posted on theaureport.com Internet site yesterday...and is well worth reading.
Premiums for gold bars hit a record high in Asia on Wednesday as lower spot prices lured more buyers, mainly in China, the world's second biggest consumer of the precious metal, amid tight physical supplies.
Premiums for gold bars in Hong Kong touched a new all-time high of $6 an ounce over spot London prices, up from $5 last week. Singapore premiums rose to $5.
Banks in China were quoting up to $7 in premiums, two traders in Singapore said.
This Reuters story, filed from Singapore, was posted on the mineweb.com Internet site...and I thank Manitoba reader Ulrike Marx for sharing it with us. It's definitely worth reading.
Although the primary purpose of the futures markets is to provide an efficient and effective mechanism for the management of price risks, when it comes to precious metals, and as we have seen in recent weeks, it has become nothing more than a casino run by a group of bullion banks that are acting as agents for the US Federal Reserve which is intent in manipulating these markets as they do all other markets. And, while much of the recent volatility has been caused by the options and futures market, the regulatory authorities of the CFTC who came up with a series of hikes in margins to stop the price of both gold and silver from rising, claiming that the markets were extremely volatile, I see they have done nothing to prevent the recent price drops.
The action or lack thereof by the regulatory authorities is most disturbing and would suggest that they themselves are colluding with the parties involved in this illegal manipulation of the gold and silver market.
Another excellent commentary on the obvious price management scheme by JPMorgan Chase et al. Author David Levenstein. a South African gold trader and bullion dealer, lets it all hang out in this rather long, but on-the-money commentary filed from Johannesburg on Tuesday. I thank reader Rudi Staudinger for our last story of the day...and it's certainly worth your time.
U.S. policymakers must address debt loads projected to rise later this decade to avoid a 2013 downgrade, even as the latest budget projections are “credit positive,” according to Moody’s Investors Service.
The U.S. budget deficit will drop to $378 billion in 2015 from a record $1.4 trillion in 2009, according to Congressional Budget Office data. The federal government will post a $642 billion deficit this year, the first time in five years that the shortfall has been less than $1 trillion. Moody’s said Sept. 11 that the U.S.’s top Aaa rating would likely be cut to Aa1 if an agreement on the debt ratio isn’t reached.
“The fact that it showed much lower debt levels going forward, we view as a positive development,” Steven Hess, senior vice-president at Moody’s and based in New York, said in a telephone interview of the CBO forecast. “More needs to be done on the policy front to address this rising debt ratio.”
This moneynews.com article was posted on their website early Monday afternoon..and today's first story is courtesy of West Virginia reader Elliot Simon.
After five years under investigation for insider trading, Steven Cohen is considering proposing a deal to prosecutors that would shut his $15 billion hedge-fund firm to outside investors, according to a person familiar with his thinking.
Cohen has discussed an agreement under which his SAC Capital Advisors LP would admit wrongdoing but wouldn’t be prosecuted unless it broke the law again, said the person, who asked not to be named because the talks are private. As part of the deal, known as a deferred prosecution agreement, Cohen would close the Stamford, Connecticut-based firm to outside investors and make it a family office that manages his personal fortune. SAC Capital probably would also pay a fine.
That Cohen would ponder a deferred prosecution agreement suggests the 56-year-old billionaire sees it as unlikely that he could fight criminal insider-trading charges and continue to run a hedge fund. Prosecutors, who have already linked at least nine current or former employees to insider trading while at SAC Capital, probably wouldn’t accept an agreement that lets Cohen off the hook, said John Coffee a professor at Columbia University School of Law.
"...won't be prosecuted unless it breaks the law again???" That's saying that you can commit your first murder, bank robbery, or fraud...and get a pass. You can't make this stuff up. This story was posted on the Bloomberg website late Monday afternoon...and it's courtesy of U.A.E. reader Laurent-Patrick Gally.
Whether it’s the shape-shifting group of reptilian descendants from the constellation Draco who control humanity, or the shadowy cabal of powerful financiers and politicians who covertly run all governments, conspiracy theorists are once again preparing for their annual jamboree of protest against those who really rule the world, this year in the highly secretive destination of... Watford.
For three days beginning on 6 June, a five-star hotel in Chandler’s Cross that normally hosts the England football team before Wembley matches, will turn over its 227 luxury rooms and 300-acre estate grounds to the über-secretive Bilderberg Group.
The Grove, once the home of the earls of Clarendon where prime ministers such as Palmerston and Walpole were guests and where a young Queen Victoria started the fashion for “the weekend break”, will turn back the clock when it welcomes around 140 of Europe and America’s most powerful leaders from banking, finance and politics with a scattering of royalty and aristocracy adding to the elite guest list.
Due to a tradition that stretches back to 1954 and the first conference held at the Hotel de Bilderberg in Oosterbeek in the Netherlands, nothing that is discussed or agreed at a Bilderberg meeting is reported. Until recently even the names of those who were invited was kept secret.
This news item appeared on the independent.co.uk Internet site on Tuesday...and I thank U.K. reader Tariq Khan for bringing it to our attention.
EU leaders will make another bid to agree rules on tax evasion after UK Prime Minister David Cameron called on 10 British tax havens to "get their house in order" on secret bank accounts.
In a letter released Monday (20 May) to the leaders of the British islands, including the Channel and Cayman islands, Cameron urged them to disclose details of accounts used for company ownership.
The islands should "provide for fully resourced and properly managed centralised registries, that are freely available to law enforcement and tax collectors, and contain full and accurate details on the true ownership and control of every company," he said.
This story appeared on the euobserver.com Internet site early yesterday morning Europe time...and it's Roy Stephens first offering in today's column.
Despite the British government’s desire to soft-pedal the country’s possible EU exit, the referendum to decide UK’s future in the Union must be held before the 2015 general election, believes the leader of the UK Independence Party, Nigel Farage.
With a lot of hard feeling swirling around the EU, one thing many seem agreed on is anger at Brussels. Nine European countries are now in recession and, with no end to austerity in sight, EU membership appears to be more trouble than its worth for some.
The leader of the Euroskeptical UKIP party, Nigel Farage, says recent research show that by participating in the EU, Britain is annually losing more than £100 billion due to membership fees and the Union’s regulations.
This story was posted on the Russia Today website late Monday evening Moscow time...and it's another contribution from Roy Stephens.
With Tim Cook being fried on Capitol Hill, it is perhaps ironic that the issue of taxes is front-and-center in the European parliament today. However, as usual, the always-willing-to-tell-the-truth Nigel Farage points out the gross hypocrisy of a political elite calling for higher taxes (on the wealthy and more broadly in peripheral nations) when the reality is that the higher-ups in the European parliament have their marginal tax rates capped at 12%. Of course, none of that matters because stocks are rising and interest rates are falling; but perhaps the 60% of Greek youth or 57% of Spanish youth might be intrigued at the new normal idea of 'fair share' in Europe.
This 3:56 minute tirade was posted on the Zero Hedge Internet site early yesterday afternoon...and this video clip is courtesy of Marshall Angeles.
A draft European Union law voted on Monday would shield small depositors from losing their savings in bank rescues, but customers with over 100,000 euros in savings when a bank failed could suffer losses.
On Monday, a group of European lawmakers in the house's economics committee voted that, from 2016, large depositors in the European Union might suffer losses if a bank gets into serious trouble, echoing a deal in Cyprus where wealthy depositors were hit hard at two banks to save the country from bankruptcy.
Under the EU proposal, a bank would only dip into large deposits of over 100,000 euros once it had exhausted other avenues such as shareholders and bondholders.
This Reuters story, filed from Brussels, was posted on their website late on Monday evening Europe time...and I thank Manitoba reader Ulrike Marx for sending it along.
Wealthy businesspeople shift millions of euros abroad while profitable companies use accounting tricks to minimize their taxable earnings and assets. The EU finally wants to create effective policies to curb these practices, but faces strong opposition from member states.
BASF, based in Ludwigshafen in southwestern Germany, has a large tax department, whose work consists partly in moving money around between continents. But now the company has discovered a tax haven right at home in Europe
In addition to a large plant, the company operates the BASF Belgium Coordination Center in Antwerp. Some 160 employees at the center spend a portion of their time searching for legal ways to reduce BASF's tax bill. In 2011, the company paid taxes on its many millions in profits at a rate of only 2.6 percent.
BASF is by far not the only company to take advantage of favorable tax conditions in a neighboring EU country to improve its bottom line. Volkswagen, currently the most profitable company in Germany, was even greedier. In 2012, Belgian subsidiary Volkswagen Group Services paid no taxes at all on profits of €153 million, and in the previous year it raked in €141 million in tax-free profits -- and it was all completely legal.
This story was posted on the German website spiegel.de yesterday afternoon Europe time...and I thank Roy Stephens for sharing it with us.
More than 8,000 French households' tax bills topped 100 percent of their income last year, the business newspaper Les Echoes reported on Saturday, citing Finance Ministry data.
The newspaper said that the exceptionally high level of taxation was due to a one-off levy last year on 2011 incomes for households with assets of more than 1.3 million euros ($1.67 million).
President Francois Hollande's Socialist government imposed the tax surcharge last year, shortly after taking office, to offset the impact of a rebate scheme created by its conservative predecessor to cap an individual's overall taxation at 50 percent of income.
This Reuters item, filed from Paris, was posted on their Internet site early Saturday afternoon EDT...and I thank U.K. reader Teresa Tannahill for bringing it to our attention.
The US Senate Foreign Relations Committee voted on Tuesday to pass a bill that will be highly unpopular in Moscow, not to mention Damascus.
The Syrian Transition Support Act would provide arms to Syrian rebels in support of a regime change — a precedent Russia deeply opposes. Moscow has already been overtly sending weapons to Assad (more intensely so as of late), so Washington's move to overtly arm the rebels could easily paint Syria as the battleground of a blossoming proxy war.
Russia won't like that idea, but it also won't like the paragraph in the bill about sanctions on anyone shipping arms or oil to the Syrian regime: Sanctions on arms and oil sales to Assad: Targeting any person or entity that the President of the United States determines has knowingly participated in or facilitated a transaction related to the sale or transfer of military equipment, arms, petroleum, or petroleum products to the Assad regime.
This very short article appeared on the businessinsider.com Internet site yesterday evening EDT...and it's Roy Stephens' final offering in today's column.
As Japan’s cherry trees bloomed and the stock market soared, Kohetsu Watanabe flew to a blossom-viewing party in Tokyo hosted by Prime Minister Shinzo Abe to tell the premier personally how bad things really are.
When the head of machine-parts maker Daikyo Seiki Co. shook hands with Abe at the 12,000-guest event in Shinjuku Gyoen park, he says he begged the premier to help small- and medium-sized companies that make up 70 percent of Japan’s industry.
“Stocks and the yen may have come back, but the state of the real economy is very different,” said Watanabe, 49, who has no plans to raise wages for his 17 employees and hasn’t paid a bonus since 2008. “It’s impossible for me to be optimistic.”
This Bloomberg story appeared on their website in the wee hours of yesterday morning MDT...and I found it in yesterday's edition of the King Report.
1. Dr. Stephen Leeb: "Gold, Silver and 100-Year Inflection Point to Crush the West". 2. Richard Russell: "I Haven't Seen This in 60 Years of Writing". 3. Ron Rosen: "Silver to Soar a Stunning 400% and Gold $1,500 in 10 Months". 4. The audio interview is with Egon von Greyerz.
Ten striking South African miners were taken to hospital on Tuesday after being hit by rubber bullets, police said, as labour strife swells in mines and factories ahead of mid-year pay negotiations.
"If our demands are not met we will have no option but to go to the streets," NUMSA national treasurer Mphumzi Maqungo told Reuters.
The comments underscored the fragility of labour relations in Africa's biggest economy since last year's bloody mining sector unrest, and pushed the rand beyond 9.50 to the dollar for the first time since early 2009.
The currency extended its two-week slide after police confirmed that security guards had fired rubber bullets at stone-throwing wildcat strikers at a chrome mine near the platinum belt town of Rustenburg, 120 km (70 miles) northwest of Johannesburg.
This Reuters story, filed from Capetown, was picked up by the mineweb.com Internet site yesterday...and I thank Ulrike Marx for digging it up for us.
India's Finance Minister P. Chidambaram is back to his favourite topic: curbing gold demand. India appears set to take even more steps to curb gold demand if imports continue to rise at the current pace, Chidambaram has said.
Speaking to the media on the sidelines of a conference, he pointed out, as consumers across the country thronged jewellery outlets this past month given the fall in the precious metal's price, that the government has decided not to distance itself from the financial problems caused by the ever rising demand by curbing gold imports yet again, despite the many measures already taken in the last few months.
Last week, India's central bank the RBI restricted, with immediate effect, the import of gold on consignment basis by banks. Even as the move will limit imports to a large extent, the government has said imports can be brought in only to meet the genuine needs of exporters of gold jewellery. However, retailers say the central bank's move is expected to lead to higher forex outgo on each transaction.
This mineweb.com story was filed from Mumbai yesterday...and is well worth reading. I thank Ulrike Marx for her third and final contribution to today's column.
Police began probing the Hong Kong Mercantile Exchange Ltd., owner of the failed commodities market set up by a member of the city’s cabinet, after the securities regulator found suspected financial irregularities.
The arrest of three men after the May 18 shuttering of the exchange prompted its Chairman Barry Cheung, who sits on Hong Kong’s Executive Council, to say he is taking a leave of absence from all public positions. Cheung hasn’t been accused of wrongdoing.
HKMEx lost its trading license after failing to attract sufficient volumes as it competed with rivals such as the Chicago Mercantile Exchange and the London Metals Exchange, which was bought by Hong Kong’s stock-exchange operator last year. Cheung, who ran the 2012 election campaign for the city’s Chief Executive Leung Chun-ying, is the latest in a series of prominent Hong Kong government and business figures to be affected by criminal investigations.
This businessweek.com story was posted on their website in the wee hours of this morning...and I thank U.A.E. reader Laurent-Patrick Gally for sending it along just before I hit the 'send' button on today's column.
In the short term, it is pretty much impossible to tell when prices have bottomed until after the fact. Instead of trying to guess the exact day or the specific price that gold and silver will turn back up, I take the long-term perspective that if gold surpasses $5,000 and silver exceeds $150 (which I consider to be questions of “when” not “if”) it won’t really matter whether someone now pays $1,700 or $1,350 for an ounce of gold or $22 or $35 for an ounce of silver. In other words, I consider today’s prices to be a bargain buying opportunity whether or not we are near the absolute market bottoms.
When markets get ready to turn, they often experience extreme volatility. Yesterday, for instance, the price of silver ranged all the way from $20.20 to $23.30, about at 15 percent swing. Almost no one was a buyer right at the moment that silver was at its daily low, as prices quickly soared. As I write this Tuesday morning, the silver price is about 10 percent above yesterday’s low.
So, did those who bought silver over the past several months when prices were higher than $20.20 overpay? Taking the long-term perspective, I don’t think so. Since most potential buyers didn’t jump in at yesterday’s low, does that mean that it is too late to get into silver? I emphatically say no!
This excellent must read commentary by Patrick Heller was posted on the numismaster.com Internet site yesterday...and the first reader through the door with the story yesterday was Elliot Simon.
I believe that the big buyer of the 10 million ounces of gold liquidated in the GLD was JPMorgan, either alone or with other collusive commercial banks. The same methodology I’ve previously attributed to a potential Mr. Big in SLV (also probably JPMorgan) is at work in GLD. If one (or 2 or 3) big buyers in GLD had merely purchased the 100 million shares that were sold in GLD, that would have quickly pushed the big buyer(s) over the 5% SEC reporting threshold thereby revealing their identity. But by having the gold redeemed out of the trust and the metal being purchased (instead of shares), stock reporting requirements are evaded. A single holder, perhaps working with a few collusive partners, have come to own what is, effectively, almost a quarter of the world’s largest gold stockpile and no one is the wiser.
This absolute must read is only part of what Ted had to say to his paying subscribers in his Weekend Review on Saturday. I thank Elliot Simon for today's last story.
Warren Buffett's Berkshire Hathaway Inc. had its credit rating cut one notch by Standard & Poor's, which cited a new methodology for evaluating insurers and Berkshire's dependence on its insurance business for dividend income.
The rating was cut to "AA" from "AA-plus," and S&P assigned a "negative" outlook, suggesting another cut could occur within a few years. S&P left its credit and financial strength ratings for Berkshire's insurance operating units at "AA-plus."
"The lower credit rating on Berkshire better reflects our view of Berkshire's dependence on its core insurance operations for most of its dividend income," S&P analyst John Iten wrote.
This moneynews.com story from last Friday was sent to me by West Virginia reader Elliot Simon on Saturday afternoon...and I thank him for today's first story.
America’s ticking debt bomb has been reset. Washington has suspended the debt ceiling, setting a date, and not a concrete dollar sum as a deadline, an unprecedented first in US history.
Citing ‘extraordinary measures’, the US Treasury has further delayed tackling America’s debt, and will wait until Labor Day, September 2nd, to revisit the burgeoning crisis. The ceiling has been lifted, and the Treasury has promised it will keep cash pumping into government spending programs beyond the debt limit through a series of emergency cash tools.
“It will not be until at least after Labor Day" when Washington will have reached their full borrowing capacity, Treasury Secretary Jacob Lew, told CNBC television on May 10th.
Elliot Simon also sent me this Russia Today story. It was posted on their website mid-morning Moscow time.
While we have wondered on numerous occasions previously if the collapse in lumber prices is the far more accurate indicator of end demand for housing (as confirmed by the recent collapse in multi-family housing starts), perhaps an even better indicator of trends in housing (and by implication the broader economy) is private sector intermediate end demand, such as Caterpillar North America sales, which unlike government data, are far less subject to political intervention, interpolation, guesswork, seasonal adjustments and otherwise, general manipulation.
And even though we have previously reported on the woes ailing the world's largest seller of bulldozers, excavators and wheel loaders, such focus was primarily targeted in the offshore markets, and especially China (the abysmal European market needs no mention). So maybe the time has come to shift attention to the US, where as Caterpillar just reported, not only are all foreign markets still trending at several impacted levels, but where US machine retail sales just saw the biggest tumble in three years, falling 18% Y/Y: the most since early 2010. What is more disturbing is that CAT equipment is used in far-broader economic activities than merely housing, and likely is a far more accurate indicator of true industrial end-demand than any other number cherry-picked by the government.
This short article was posted on the Zero Hedge website...and I thank 'David in California' for sending it our way.
“We don’t have to worry about a recession — we are in a depression,” says James Rickards.
“If you take the classic definition of a sustained, long-term downturn with economic growth below trend, then we are in the midst of a depression,” says the senior managing director of Tangent Capital and author of “Currency Wars.”
Rickards doesn’t see Fed Chairman Ben Bernanke as having the solution to the economic malaise gripping the county.
“Bernanke’s not a trader, so doesn’t think like a trader; he has no exit plan,” Rickards points out.
“There’s a good possibility I may never see another rate hike in my lifetime,” says Rickards.
This very short item was posted on the New York Post website late on Saturday night...and my thanks go out to Harold Jacobsen for bringing it to our attention.
Three months after hackers working for a cyber-unit of China’s People’s Liberation Army went silent amid evidence that they had stolen data from scores of American companies and government agencies, they appear to have resumed their attacks using different techniques, according to computer industry security experts and American officials.
It is not clear precisely who has been affected by the latest attacks. Mandiant, a private security company that helps companies and government agencies defend themselves from hackers, said the attacks had resumed but would not identify the targets, citing agreements with its clients. But it did say the victims were many of the same ones the unit had attacked before.
In interviews, Obama administration officials said they were not surprised by the resumption of the hacking activity. One senior official said Friday that “this is something we are going to have to come back at time and again with the Chinese leadership,” who, he said, “have to be convinced there is a real cost to this kind of activity.”
This article was posted in the Sunday edition of The New York Times...and it's Roy Stephens' first offering in today's column.
The once almighty U.S. dollar has lost its luster in some corners of the world.
But there's one outpost where greenbacks have never been stronger: in socialist, anti-imperialist Venezuela, whose government rails against American-style capitalism as the bane of humanity. The dollar is not just holding steady here -- it is flourishing like nowhere else, the byproduct of the fast-wilting economy President Hugo Chavez left behind when he died in March.
Black-market dealers operating on the thriving underground market sell greenbacks at more than four times the official, government-set rate of 6.3 bolivars to the dollar. And the price they're getting these days -- 28 per dollar -- is more than three times what it was just eight months ago.
This very interesting read was filed from Caracas...and showed up on The Washington Post website on Friday. I found it over at the gata.org Internet site on the weekend.
Rumors that Brazil's social security fund called Bolsa Familia was to be cancelled led thousands of people to rush to withdraw money from a Brazilian bank over the weekend.
Customers lined up at ATMs at dozens of bank branches of Caixa Economica Federal, a government-owned bank, which pays the social security subsidy on Saturday and Sunday.
"The bank branches themselves aren't open on Saturdays. What happened is that once the rumor gained momentum, people flocked down to their local branches to try to withdraw money from the ATMs," Rafael Carregal, a journalist at Brazil's main TV network Globo told CNBC.
Brazilian newspaper Estado de Sao Paulo reported that at five branches in the northeastern city of Sao Luiz and four others in the state of Maranhao, depositors broke into branches. Most of the branches that were affected were in the poorer northeast region of the country.
This short CNBC article was posted on their website early on Monday morning EDT...and I thank U.A.E. reader Laurent-Patrick Gally for sliding this into my in-box in the wee hours of this morning.
Monetarists across the world have warned that the International Monetary Fund and the Bank for International Settlements are making an historic error by calling for a withdrawal of emergency stimulus before the global economy has fully recovered.
The two watchdogs launched broadsides against central bank largess last week. The BIS -- the forum of central banks -- was particularly blunt, seeming to imply that quantitative easing "does not work".
Critics say this risks undermining the credibility of radical measures when more may yet be needed. They fear central banks could repeat the mistake made in 1937 when the Federal Reserve lost its nerve and tightened too soon, tipping America back into depression.
"The BIS and the IMF are deeply misguided and risk doing the world a grave disservice. The biggest threat right now is irrational fear of bubbles among central banks," said Lars Christensen, a monetary theorist at Danske Bank.
This longish piece by Ambrose Evans-Pritchard was posted on the telegraph.co.uk Internet site on Sunday afternoon BST...and it's Roy Stephens' second offering of the day.
Conservative activists have begun defecting to the UK Independence Party in protest at the Tory leadership’s “arrogant and insulting” attitude towards grassroots members.
Local Conservative party campaigners, including the chairman of one constituency association, will this week pledge their support for Nigel Farage after one of David Cameron’s allies described grassroots Tories as “mad, swivel-eyed loons”.
Mr Farage uses an advertisement in Monday's Telegraph to urge Conservative voters to back Ukip. The “loons” description, he says, is “the ultimate insult” from a party leadership that has betrayed the trust of its own supporters.
He writes in the advertisement: “Only an administration run by a bunch of college kids, none of whom have ever had a proper job in their lives, could so arrogantly write off their own supporters.”
This short article appeared on The Telegraph's website late on Sunday evening...and is also courtesy of Roy Stephens.
1. Dan Norcini: "Incredibly Important Developments in Gold and Silver Markets". 2. Egon von Greyerz [#1]: "The Big Upside Move in Gold and Silver is Now in Front of Us". 3. Hong Kong fund manager William Kaye: "Gold and Silver Smash and What Soros and Major Players are Doing". 4. Robert Fitzwilson: "Gold, Silver, Massive Leverage and Super Wealthy Panicking". 5. Andrew Maguire: "This Key Level to Trigger Huge Central Bank Buying". 6. Egon von Greyerz [#2]: "Clients Denied Gold at Major Banks as Shortage Intensifies". 7. The first audio interview is with Art Cashin...and the second audio interview is with Andrew Maguire.
Stocks are for lovers and gold is for haters. That's how one especially supercilious strategist (is there another kind?) sizes up the two markets, and it's clear he's been feeling the love lately. Stocks are at new highs in the U.S. and many other venues, while Japan's market is strapped to a rocket ship, all propelled by money fresh off the printing presses of the world's central banks.
Fans of the yellow metal, meanwhile, are feeling rather battered and bruised these days from the beating they've taken over the past month or so and, indeed, for more than a year and a half. Given all the quantitative easing -- which is how money printing is referred to in polite company these days, one would think gold would be getting a little love (or a facsimile of the same that cash can sometimes provide.)
I thank Ken Hurt for finding this Barron's article from Saturday for us...and I thank Chris Powell for providing the 'new and revised' headline. The actual headline reads "This Time Gold Bugs May Have a Point".
In his new commentary former Assistant U.S. Treasury Secretary Paul Craig Roberts squarely accuses the Federal Reserve of using the futures markets to suppress gold and silver prices to protect the U.S. dollar and the Fed's "quantative easing" policy.
"What," Roberts asks, "does this illegal manipulation of markets by the Federal Reserve tell us? It tells us that the Federal Reserve sees no way out of printing money in order to support the federal deficit and the insolvent banks. If the dollar came under attack and the Federal Reserve had to stop printing dollars, interest rates would rise. The bond and stock markets would collapse. The dollar would be abandoned as reserve currency. Washington would no longer be able to pay its bills and would lose its hegemony. The world of hubristic Washington would collapse."
Roberts' commentary is headlined "Washington Signals Dollar Deep Concerns" and it was posted on his Internet site on Saturday. I thank Chris Powell for the above introductory paragraph...and the headline...but the first reader through the door with this story was Rob Bentley.
The Hong Kong Mercantile Exchange will go ahead with a planned US$100 million rights issue and be ready within months to reapply for the trading licence it handed back to regulators at the weekend after it became clear the struggling commodity trader could no longer meet crucial financial criteria.
HKMEx chairman Barry Cheung Chun-yuen told the Sunday Morning Post that the decision to surrender the trading licence and not reopen for business tomorrow would have no impact on investors and that client contracts would be honoured.
"There is no question of not getting your money back or anything like that," Cheung said. "People absolutely do not have to worry about that and I don't think they are. The only thing they will want to know is what settlement price will be used."
This story, filed from Hong Kong, was picked up by the South China Morning Post on Sunday...and I found it in a GATA release.
India needs to bring down its gold demand from about 1,000 tonnes a year to 700 tonnes, which prevailed only a few years ago, a top policymaker has said.
This is necessary as increased gold imports are worsening the current account deficit, C. Rangarajan, chairman to the Prime Minister's Economic Advisory Council, said.
The demand for gold can be reduced by taming inflation and enhancing the real rate of return on financial products, Rangarajan said in his inaugural address at the 6th International Gold Summit, organised by Assocham here on Wednesday.
In the last two fiscal years -- 2011-12 and 2012-13 -- the country's gold imports in quantitative terms stood at 1,079 tonnes and 1,017 tonnes respectively.
This story was posted on thehindubusinessline.com Internet site last Wednesday...and I found it in a GATA release on Saturday. The actual headline reads "Need to Bring Down Gold Deman, Says Rangarajan".
The sudden vulnerability of bank deposits to confiscation for bank rescues is sending money out of banks and into equities, bonds, and gold, GoldMoney's Alasdair Macleod writes on Sunday. But for the time being, bullion banks are coping with increased demand for gold delivery by rationing metal to customers. Macleod's commentary is headlined "Bank Balances and Gold" and it's posted at the goldmoney.com Internet site.
I found this commentary in a GATA release on Sunday.
While we have become used to the almost daily trading-halts in Japanese government bonds, when the CME reports that Silver trading was halted four times overnight, it is increasingly clear that this market is anything but 'normal'.
This very short piece was posted on the Zero Hedge website yesterday morning...and I thank Elliot Simon for sending it along.
Gold prices continue to take a beating with futures at $1,354 an ounce.
Marc Faber, publisher of The Gloom, Boom and Doom Report, told Talking Numbers that he is buying physical gold and will buy more if it hits the $1,300 mark.
But, he said that he isn't keeping it in the U.S. "I bought gold at $1,400, I buy every month some gold, and I have an order to buy more at $1,300 because I want to keep an allocation towards gold – physical gold – and not stored in the United States at all times."
This short commentary also has the entire CNBC video interview embedded as well...and it was posted on the businessinsider.com Internet site yesterday morning EDT.
Changi Airport, Southeast Asia’s largest freight airfield, plans to attract more gold bars, tuna and vaccines to Singapore as it seeks to increase handling of high-value cargo to make up for slowing trade.
“An underlying demand for these things is growing with the rise of the Asian middle class,” Fong said in a May 15 interview. “People want higher-value, higher-quality food. Demand in North Asia is growing fast.”
The airport is offering 50 percent rebates on landing fees since the start of the year to help cargo airlines struggling with lower demand amid sluggish economies in the U.S. and Europe. Changi is enticing carriers of high-yield cargo with a tax-free maximum-security vault to store valuable art, gold and gems, as well as Southeast Asia’s biggest refrigerated facilities for perishable goods.
This story, filed from Singapore, was posted on the Bloomberg Internet site early yesterday morning Mountain Daylight Time.
The prospect of fresh strikes in South Africa's already embattled mining sector resurfaced on Sunday after representatives of the National Union of Mineworkers (NUM) said it would seek pay rises of up to 60% from gold and coal producers.
This comes as mining companies battle higher costs and falling prices in an already heated labour climate, and as the country is hoping to avoid the 2012 wildcat strike action at platinum and gold mines that claimed the lives of 50 people and cost the industry and economy billions in lost revenue and production.
Mineworkers are mobilising to assert themselves, with the NUM fighting a challenge to its once near monopoly in the shafts from the Association of Mineworkers and Construction Union (Amcu), which has poached tens of thousands of platinum miners from it in a violent struggle for members.
NUM said it was seeking an entry-level minimum monthly wage of R7 000 for gold and coal surface workers and R8 000 for those underground in a submission to the Chamber of Mines.
This Reuters piece was picked up by the fin24.com Internet site on Sunday evening...and I thank Matthew Nel for digging it up for us.
Platinum is a precious metal, as is palladium, though to a lesser degree. However, like silver, both are also industrial metals. Unlike silver, it's their industrial use that is the primary price driver for both platinum and palladium – and that use is undergoing a fundamental shift.
The largest source of demand for platinum and palladium is the automotive industry, for use in auto catalysts. In turn, the fortunes of the auto industry are sensitive to the health of the world's major economies. We've been bearish on platinum-group metals for years, primarily because we weren't convinced a healthy – much less roaring – world economy could be sustained when so many governments continue spending beyond their means.
We reconsidered the market last year, when strikes in South Africa – home to 75% of global platinum production and 95% of known reserves – threatened supplies. But as we wrote last December, the strikes ended without great impact on long-term supply.
Since then, however, the fundamentals of this market have changed. Others may disagree with our economic outlook, which is still bearish, but it's due to supply issues – not demand – that our interest is now drawn to these metals, and particularly to palladium.
This commentary by Jeff Clark was contained in yesterday's edition of the Casey Daily Dispatch...and it's definitely worth reading.
Daily Bell: Why did the price of gold plummet?
Doug Casey: Once again, I see it as just the normal, albeit large, fluctuation. It's not like you shouldn't expect a market that's risen steeply for a dozen consecutive years to come off at some point. Especially since not only does everything look rosy in the stock and bond markets, but even real estate spears to be recovering. A lot of conventional – and foolish, in my view – people think that printing trillions of new currency units has solved the crisis, and obviated the need for owning gold. So there's selling. Perhaps a big trader sold a bunch of contracts to set off a lot of stop losses and panic the market. If so, it was a smart trade, and it worked.
Now, I know that that's not a very sexy explanation. But I'm a believer in Occam's Razor, which hold that the simplest explanation of something is usually the correct one. However, I'm afraid it leads me to a pet subject of mine, one that will both take a while to explain, and will, regrettably, antagonize some of your readers. Many gold bugs (but not all, because I too am a gold bug) seem to think that a coterie of malefactors of great wealth sit around a huge boardroom table, perhaps chaired by Dr. Evil cradling his white cat, and send forth their minions, "Da Boyz," to "smack down" the depressed and struggling gold and silver markets. A large number of gold bugs are also conspiracy bugs. They have all of these standard catchphrases for describing what's happening. I've read their stuff for years and, frankly, it impresses me as little more than accusations, name-calling and conjecture.
"...I don't want the GATA guys and their supporters to take this personally. I simply think they're wrong..."
Doug explains why he feels that the gold market is free and fair...and why all us price management believers are out to lunch. Doug holds nothing back...and whether you believe him or not...it's worth reading. I thank Doug for sending it to me.
Interviewed yesterday by The Daily Bell, Casey Research Chairman Doug Casey once again dismissed complaints of gold market manipulation.
"I don't doubt that the powers-that-be would prefer to have the price of gold lower," Casey says, "just like they would prefer to have the price of wheat and copper and lumber and everything else lower. But there's no evidence that I've ever been shown other than, frankly, just assertions."
This is distressing but maybe, to get Clintonistic, it depends on the meaning of "shown." Though GATA has sent to Casey -- and once even handed to him face to face -- all sorts of documentation of gold market manipulation, if he has not looked at it, has he ever been "shown"? But then the question becomes whether he wants to look at it, though one might hope that anyone might want to look at the evidence before commenting on an issue.
In his interview with The Daily Bell, Casey acknowledges the likely motive of central banks in wanting gold and commodity prices lower. But he refuses to acknowledge their opportunity along with the evidence lest faith in markets be shaken.
GATA believes in markets as much as anyone could. Indeed, gold price suppression is a catastrophe for the world precisely because it is the prerequisite for the destruction of all markets, the mechanism by which a few unelected grandees strive to control the price of all capital, labor, goods, and services in the world, resulting in their worldwide misallocation.
This commentary [with multiple links] by GATA's secretary treasurer Chris Powell, was posted on the gata.org Internet site yesterday evening and...along with Doug's interview at The Daily Bell...it, too, is worth reading.
The last time that Doug got up and spoke against the price management scheme by JPMorgan and a small handful of bullion banks, was back in April of 2012. GATA's Chris Powell had a lengthy response then as well...but has updated in his comments above, so it would serve no purposed to link that older article.
But James Turk had something to say about Doug's comments back then...and Mr. Turk's commentary, although rather long, are still as relevant today as they were back then...so I've decided to include it in today's column.
As I said, it's a long read, so top up your coffee before you get started.
Here's another item I've posted before. This is an audio interview with silver analyst Ted Butler by Jim Puplava over at financialsense.com that was recorded on March 17, 2012. In it, Ted describes in minute detail how the silver [and gold] price management scheme is orchestrated on the Comex/Globex futures market.
It explains exactly how every waterfall decline in silver [and gold] happens...and the sequence of events that precede it...and follow it. It's been the same pattern for over twenty years. Ted has been following the goings-on in silver on the Comex futures market for about 30 years...and is a world authority on it.
So if you want to know what happened on April 12/15th...and yesterday in the thinly-traded Far East market...Ted has the answers.
Because of his work, the Commitment of Traders Report is now widely followed just about everywhere, even if some of the commentators using it don't interpret the data correctly. The other report that Ted uncovered was the Bank Participation Report...and as Ted put it in a commentary for paying subscribers within the last week...if JPMorgan could kill these two reports, they would...as it exposes their movements [and others] to the naked light of day.
If you've listened to this before, it's time for a refresher...and if you haven't, it's a must listen.
You know that gold bear market that the financial press keeps touting? The one George Soros keeps proclaiming? Well, it is not there. The gold bear market is disinformation that is helping elites acquire the gold.
Certainly, Soros himself doesn’t believe it, as the 13-F release issued by the Securities and Exchange Commission on May 15 proves. George Soros has significantly increased his gold holding by purchasing $25.2 million of call options on the GDXJ Junior Gold Miners Index.
In addition the Soros Fund maintains a $32 million stake in individual mines; added 1.1 million shares of GDX (a gold miners ETF) to its holdings which now stand at 2,666,000 shares valued at $70,400,000; has 1,100,000 shares in GDXJ valued at $11,506,000; and 530,000 shares in the GLD gold fund valued at $69,467,000. [values as of May 17]
The 13-F release shows the Soros Fund with $239,200,000 in gold investments. If this is bearish sentiment, what would it take to be bullish?
This commentary by Paul was posted on this website yesterday...and I thank reader Ken Hurt for bringing this to our attention.
The past week or three have been, to say the least, disappointing for precious metals investors. Gold and silver have continued to step downwards towards new interim lows as money continues to move from bullion (or at least from paper variations of it) to the general stock markets which have been continuing to perform well. All this despite, so we hear, continuing high demand for physical gold and silver from Asian markets in particular. But this physical metal demand growth seems to be being more than countered by some strange precious metals sales patterns – the latest of which saw silver plunge 10% in 4 minutes on a big computer sell order – from a single client according to a major Japanese bank – at a light trading time.
If anything out there demonstrates how the dice are loaded against the individual investor in today’s markets, then the recent goings on in gold and silver prices surely do. This is not a natural market. Sure, prices can move up and down and people can get their fingers burnt but when we come across sales of the kind of magnitude seen recently they have to be a hugely concerted attempt to move the market to the perpetrator’s advantage.
This article by mineweb.com's Lawrie Williams was posted on their website early this morning in London...and it's definitely worth reading.
The push to restore the Glass-Steagall banking act has returned to the U.S. Senate.
Sen. Tom Harkin on Thursday introduced S. 985, which would rebuild the wall that had once separated commercial banking from brokerage and investment speculation. The Iowa Democrat’s bill came on the 80th anniversary of the original 1933 Glass Steagall Act.
The text of S.985 was not posted on the Senate website as of Friday afternoon, but it is believed to resemble HR 129, introduced by Reps. Marcy Kaptur, D-Ohio, and Walter Jones, R-N.C. Their measure has 62 bipartisan sponsors in the House.
Meantime, 20 state legislatures are considering resolutions urging Congress to reinstate Glass-Steagall. Lawmakers in four states -- South Dakota, Maine, Indiana and Alabama – have passed such measures.
This news item was posted on the examiner.com Internet site yesterday...and I thank Bill Gebhardt for today's first story.
We are in the midst of the worst Washington scandal since Watergate. The reputation of the Obama White House has, among conservatives, gone from sketchy to sinister, and, among liberals, from unsatisfying to dangerous. No one likes what they're seeing. The Justice Department assault on the Associated Press and the ugly politicization of the Internal Revenue Service have left the administration's credibility deeply, probably irretrievably damaged. They don't look jerky now, they look dirty. The patina of high-mindedness the president enjoyed is gone.
Something big has shifted. The standing of the administration has changed.
As always it comes down to trust. Do you trust the president's answers when he's pressed on an uncomfortable story? Do you trust his people to be sober and fair-minded as they go about their work? Do you trust the IRS and the Justice Department? You do not.
This op-ed piece by Peggy Noonan showed up in The Wall Street Journal on Thursday...and I found it in yesterday's edition of the King Report.
The leading economies of the industrialized nations may not have a lot in common, but they are all afflicted by this: Inflation is too low.
That was the astoundingly consistent theme out of a range of data released Thursday. Prices rose 1.1 percent over the 12 months that ended in April in Germany, 0.8 percent in France and 1.3 percent in Italy. In the United States, the consumer price index rose 1.1 percent over the last year. Japan reported surprisingly strong first-quarter growth this week as its aggressive new stimulus policies took effect, but that came against a backdrop of continued falling prices; its consumer price index fell 0.9 percent in the year that ended in March.
The below-trend inflation is partly attributable to falling commodities prices, and just as policy shouldn’t overreact when a short-term commodity blip causes inflation, it shouldn’t make the same mistake in reverse. But even excluding food and energy, U.S. CPI was up only 1.7 percent, still below the level of inflation the Federal Reserve is aiming for. And the situation in Europe is particularly worrisome; if the euro zone is going to have any hope of rebalancing its economy without a prolonged depression, it will need higher inflation in core European countries like Germany and France, offset by lower inflation in countries like Greece and Spain. Instead, prices are rising too slowly even in the core, and there is deflation, or falling prices, in Greece.
The biggest conclusion to draw from all of this is that warnings that massive quantitative easing efforts would spark explosive inflation are turning out to be as wrongheaded as can be. In the United States and Japan, central banks now have open-ended policies of printing money to buy assets. But while the money seems to be finding its way into asset markets, such as for stocks and corporate debt, it isn’t being circulated so widely as to drive up prices for consumers.
This article, along with some excellent charts, appeared in The Washington Post on Thursday...and it's courtesy of West Virginia reader Elliot Simon.
From my perspective, the global nature of excesses and fragilities is the most worrying aspect to the current Financial Euphoria. Essentially, the entire world faces acute financial and economic instability. The entire world suffers from a widening gulf between inflating asset prices and mounting economic vulnerabilities. Seemingly the entire world suffers from an increasingly protracted period of near-zero rates, aggressive central bank monetary stimulus and a desperate search for market returns. The entire global financial “system” is an over-liquefied speculative Bubble – stoked by central bankers responding desperately to acute financial and economic fragilities.
As noted above, find a speculative Bubble and there will be an underlying source of monetary disorder. From my perspective, Bubbles are at their core about a self-reinforcing over-issuance of mispriced finance. Major market misperceptions are integral to fueling Bubbles – and these misperceptions are often associated with some form of government support/backing of the underlying Credit financing the boom.
These days, the dynamic of over-issued, mispriced finance is a global phenomenon – the U.S., Europe, Japan, China, Asia and the “developing” economies. The perception that central bankers will ensure ongoing asset inflation is an unprecedented global phenomenon. The collapse in yields and risk premiums in debt markets across the globe is unlike anything I’ve ever witnessed or studied historically. These days, asset inflation, speculation and Bubbles prevail virtually everywhere. Moreover, the gulfs between inflating assets and weakening economic fundamentals seemingly widen everywhere, as Financial Euphoria engulfs debt and equity securities markets around the world. As noted this week by the great market watcher and historian Art Cashin: This market is unlike anything we’ve ever experienced.
Doug's Credit Bubble Bulletin, posted on the prudentbear.com Internet site every Friday, is always a must read...and yesterday evening's edition is no exception. I thank reader U.D. for sending it along.
The "driving boom is over," or so says a new study of American attitudes toward the automobile.
After decades of adding more cars to their household fleet while moving further and further out into the suburbs, Americans are waiting longer to get licensed, driving less and increasingly turning to alternatives such as mass transit or car-sharing programs, according to a new study by the U.S. Public Research Interest Group, or PIRG.
Declaring the boom in automotive transportation "over," the study stresses that, "the time has come for America to hit the reset button on transportation policy—replacing the policy infrastructure of the driving boom years with a more efficient, flexible and nimble system that is better able to meet the transportation needs of the 21st century."
This very interesting CNBC article appeared on their website early in the afternoon on Wednesday...and I've been saving it for today's column. I thank Elliot Simon for bringing it to our attention.
What can be said of Doug Casey? His life and career are the stuff of legend among investors and speculators, especially in the junior resource space.
Doug is a friend and mentor to Chris and I. For over 25 years I've read his monthly missives, devoured his books and attended his workshops. I credit Doug with leading me to my first big score, and imparting enough wisdom to make me see the sense of holding onto that winner as long as it made sense to. The value of that lesson was something that can never be repaid.
Doug was one of the key people, along with my friend "Dave" with whom I credit for arming me with the confidence to leave my comfortable life in the States, family, friends and business partners to experience the broader world and invest and speculate in the frontier markets.
Although he isn't always right, and has been early on many of his calls, his viewpoints are always enlightening and entertaining!
This interview with Doug was posted on the zerohedge.com Internet site on Thursday...and is definitely worth reading.
Late last Tuesday, after months of intense lobbying, and campaigning visits to 47 countries, Roberto Azevedo was confirmed as the next director general of the World Trade Organisation.
Amidst the Queen’s Speech and the resignation of a certain football manager, Azevedo’s appointment barely flickered on the U.K. news radar. Yet it was an event of some significance that could have major implications for the future shape of the global economy.
While less well-known than the International Monetary Fund, the WTO is the most important economic multilateral on earth. With 159 member states, this Geneva-based organisation can be likened to a vast and highly specialised international court, designed to arbitrate on complex trade disputes between governments that come into conflict, so as to keep protectionism in check.
If a nation feels another is unfairly blocking its exports, it complains to the WTO. Ranks of in-house lawyers then interpret international trade rules and issue an independent judgment. If countries found guilty don’t comply, then all members are meant to stop trading with them and close ranks — although it very rarely comes to that.
This story appeared on the telegraph.co.uk Internet site last Saturday...and it's been sitting in my in-box since then, awaiting a spot in today's column. I thank Roy Stephens for his first offering of the day.
Martin Weale, a member of the rate-setting Monetary Policy Committee, warned that more stimulus risked a damaging surge in inflation because price rises have already been higher than the Bank's 2pc target for most of the past four years. The persistent overshoot, he said, “is a constraint on my freedom of action”.
“Failure to damp sufficiently any new shock pushing up on inflation would result in inflation expectations becoming more entrenched. That, in my view, limits the scope we have to support demand at the current juncture,” he told the British-American Business Council Transatlantic Conference in Birmingham.
George Osborne appointed Mr Carney on a ticket of “monetary activism” to help boost growth. The Chancellor has also asked the MPC to investigate how it might use “forward guidance” as an additional tool. But Mr Weale, who has been sceptical about the policy, suggested there is little it can achieve.
This Roy Stephens offering showed up on The Telegraph's website early yesterday afternoon BST.
On May 6, I wrote Europe was in danger of falling into a permanent recession -- a depression.
Now, the European statistical agencies report France joined Italy and Spain's recessions during the first quarter and economic activity across the entire eurozone continued to contract.
The straightjacket imposed by euro-think -- allegiance to a failed experiment in a common currency, ill-conceived and overzealous austerity measures and halting and inadequate labor market reforms -- caused continued economic contraction across the entire eurozone.
This commentary was posted on the upi.com Internet site yesterday...and it's definitely worth your time. I thank Roy Stephens again.
The dismantling of Germany's nuclear power plants will be one of the greatest tasks of the century as the country moves to phase out atomic energy. It will take at least until 2080 to complete the job. But what happens if energy utility companies who own the facilities go bust before the work is done?
When politicians put far too much pathos into their speeches, people should be on their guard -- with a notable exception. There is one issue where no comparison is overinflated and no superlative appears exaggerated: Winfried Kretschmann, for instance -- the governor of the southern German state of Baden-Württemberg and a member of Germany's Green Party -- spoke of "theological timeframes" that now need to be decided upon.
The issue is nuclear waste and its safe disposal. Germany will have to build a storage facility deep underground that can survive the ravages of wars, revolutions and even another ice age. Indeed, the remains of the nuclear age will have to be kept in a final repository for 1 million years -- longer than the human race has existed.
This very interesting and very profound 2-page essay was posted on the German website spiegel.de on Thursday, May 10th. Marshall Angeles sent it to me on the Tuesday...and it's been waiting for a place in today's column.
The Obama administration denounced Russia on Friday for providing Syrian President Bashar Assad's regime with anti-ship missiles, saying the weapons would only worsen a war that Washington and Moscow have been promising to work together on stopping.
Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, criticized what he called an "unfortunate decision that will embolden the regime and prolong the suffering." He spoke at a news conference after the New York Times reported that Russia recently delivered an advanced version of Yakhont anti-ship cruise missiles to Syria.
"It's ill-timed and very unfortunate," Dempsey said.
Defense Secretary Chuck Hagel also urged Russia to rethink its military aid, saying that the U.S. and Russia both wanted to stabilize Syria after more than two years of civil war but that the Kremlin's military support makes the situation even more dangerous.
If this isn't a clear-cut case of the pot calling the kettle black, then I don't know what is. This AP story, posted on the foxnews.com Internet site yesterday, is a must read for all students of the "New Great Game"...as are the next two stories. I thank Marshall Angeles for his second offering in a row.
Earlier this week, the CIA's Russian outpost was deeply humiliated when (in a calculated move following accusations that the U.S. had not gotten appropriate Russian information on the two Boston bombers, and following the visit of John Kerry whose primary objective was to, unsuccessfully, get Russia to relent on Syria) Russia's FSB exposed and broadcast on live TV the arrest of its agents caught while attempting to recruit a Russian spy.
Back then we suggested to "expect a prompt retaliation by the US" however it turns out Russia was not nearly done with embarrassing the US in what is becoming an obvious campaign to humiliate the US intelligence service, this time by going where very few clandestine operations go, at least during peacetime detente: by publicly exposing the head counterparty US spy.
As The Telegraph reports, "Russia's Federal Security Service has publicly revealed the identity of a man it calls the CIA station chief in Moscow, in what experts say is a serious breach of intelligence protocol."
This Zero Hedge article was posted on their website early yesterday afternoon Eastern Daylight Time...and it's a must read...as is The Telegraph story to which it is linked. I thank 'David in California' for finding it for us.
The CIA has crossed a certain ‘red line’ in professional ethics of intelligence as American spy Ryan Fogle attempted to recruit a Russian agent, an FSB operative told Russia Today.
“In case with Fogle, the CIA crossed the red line and we had no choice but to react observing official procedures,” a representative of the Russian Security Service, the FSB, said in an interview with RT.
The spy story broke earlier this week after it was made public that Fogle – who had worked under the guise of a third secretary at the U.S. Embassy in Moscow – was detained after being caught red-handed trying to recruit a Russian intelligence officer for the CIA. Following the incident he was expelled from Russia.
As early as by autumn 2011, the FSB was aware that the CIA was pursuing a goal to get an informer within the Russian special services, the agent told RT.
This story was posted on the Russia Today website in the early afternoon Moscow time...and it's another offering from Roy Stephens.
Sixty-six percent of Pakistan's 185 million people are under the age of 30 and almost all of them say they are worse off today than when they were 21.
They also say they would rather have a "strong leader" or one with a "strong hand" than a democracy.
Now they have what they wish -- Nawaz Sharif, 63, a former prime minister who was ousted in 1999 in Pakistan's fourth military coup since independence in 1947.
Thus, Pakistan has been ruled by the military for 33 years, or half of its life as an independent nation.
This is upi.com news item is definitely worth your time...and is an absolute must read for all "New Great Game" students. Roy Stephens sent it to me on Wednesday...and I've been saving it for today as well.
This week the Navy will launch an entirely autonomous combat drone — without a pilot on a joystick anywhere — off the deck of an aircraft carrier, the George H. W. Bush. The drone will then try to land aboard the same ship, a feat only a relatively few human pilots in the world can accomplish.
This exercise is the beginning of a new chapter in military history: autonomous drone warfare. But it is also an ominous turn in a potentially dangerous military rivalry now building between the United States and China.
The X-47B, a stealth plane nicknamed “the Robot” by Navy crews, is a big bird — 38 feet long, with a 62-foot wingspan — that flies at high subsonic speeds with a range of over 2,000 miles. But it is the technology inside the Robot that makes it a game-changer in East Asia. Its entirely computerized takeoff, flight and landing raise the possibility of dozens or hundreds of its successors engaged in combat at once.
It is also capable of withstanding radiation levels that would kill a human pilot and destroy a regular jet’s electronics: in addition to conventional bombs, successors to this test plane could be equipped to carry a high-power microwave, a device that emits a burst of radiation that would fry a tech-savvy enemy’s power grids, knocking out everything connected to it, including computer networks that connect satellites, ships and precision-guided missiles.
This op-ed piece showed up on The New York Times website last Sunday...and is another story that had to wait until today's column. It's also had a change in headline...and now reads "Pilotless Planes, Pacific Tensions". It sounds almost benign now...but it's an eye-opener...and a must read. I thank Roy Stephens for sending it.
Defense Against the Psychopath is a documentary excerpted from chapter one of my book; The Art of Urban Survival. It teaches people how to recognize and defend against our society's most dangerous predators, psychopaths.
The first line of defense against these people is acknowledging their existence.
This very disturbing 39-minute video falls into the absolute must watch category. Ever since I was aware of their presence, I run everyone I have medium to long-term dealings with, through this "sociopathic filter"...and, dear reader, you should do precisely the same thing. I thank reader "Steve in Las Vegas" for bringing this first rate educational video to my attention...and now to yours.
1. Andrew Maguire [#1]: "Physical Demand Shows Gold in Massive Bull Market". 2. Egon von Greyerz: "Coming Collapse, Massive Global Debt and the Bernanke Fed". 3. Art Cashin [#1]: "Shorts Being Squeezed and Market May Go Parabolic". 4. Andrew Maguire: [#2]: "Bullion Banks Are About to Exploit Gold and Silver". 5. Art Cashin [#2]: "Money Supply Going Parabolic, Gold and Inflation".
A box containing $625,000 in gold arrived at Miami International Airport early Tuesday but disappeared about an hour and a half later, Miami-Dade police say.
An American Airlines plane arrived at Miami International Airport from Guayaquil, Ecuador, and docked at Gate D3 at 4:42 a.m. Tuesday, according to a Miami-Dade Police Department incident report. A group of employees unloaded the plane -- including the box containing the gold -- and moved it to the other side of the plane about 5:15 a.m.
A tug arrived at the plane from Gate D6, according to the report. It then drove away with the cart holding the plane's cargo at 5:22 a.m. Surveillance video showed the tug continue to D37 before it entered an alley and disappeared from the video.
This story is a couple of days old, but I didn't have space for it until now...and I thank Marshall Angeles for sending it along.
Gold, down 17 percent since January, is poised to lose 20 percent in a year as inflation fails to accelerate and with the worst risks to the global economy waning, Credit Suisse Group AG said.
Gold will trade at $1,100 an ounce in a year and below $1,000 in five years, according to Ric Deverell, head of commodities research at the bank. Lower prices are unlikely to lure more central-bank buying, said Deverell, who worked at the Reserve Bank of Australia for 10 years before joining Credit Suisse in 2010.
“Gold is going to get crushed,” Deverell told reporters in London today. “The need to buy gold for wealth preservation fell down and the probability of inflation on a one- to three-year horizon is significantly diminished.”
This Bloomberg article was posted on their website late Thursday morning MST...and if you believe this 'analyst'...then I have a bridge I'd like to sell you. I thank Ken Hurt for sharing it with us.
Gold bears are dominant again after prices resumed their slump and billionaire George Soros joined investors selling holdings in exchange-traded products that have retreated to a two-year low.
Seventeen analysts surveyed by Bloomberg expect prices to fall next week, with eight bullish and three neutral, the highest proportion of bears in two weeks. The analysts were divided a week ago after gold rebounded as much as 13 percent from the two-year low of $1,321.95 an ounce on April 16. ETP holdings slid 16 percent to 2,207.1 metric tons this year, the lowest since July 2011, data compiled by Bloomberg show.
“The momentum has slowed significantly,” said Jeremy Baker, a senior commodities strategist who oversees about $800 million of assets at Harcourt Investment Consulting AG in Zurich and who forecasts prices may drop as low as $1,200 in six months. “The safe haven has definitely lost its gleam. We are in a declining phase here.”
This Bloomberg story is from yesterday...and another offering from reader Ken Hurt. Along with that bridge, I have some swamp land in Florida for sale as well.
We have tried to balance supply and demand figures in the gold market to answer a 15 year old question - “where is the supply of gold coming from?” In 1998, Frank Veneroso first suggested that it was the Western Central Banks that were supplying the market and we’ve been looking for a smoking gun ever since.
We have published our research several times, but none has got more attention amongst gold-watchers than our two pieces on the activities of Western Central Banks. In the Markets at a Glance entitled “Do Western Central Banks Have Any Gold Left Part II” we surmised that more than 4,500 tonnes of gold was exported by the United States between 1991 and 2012. Further, we postulated that it must have come from the US Government as they would be the only viable provider of metal in this quantity. There is no other seller in the market that could explain the discrepancy in these import/export figures. Let’s review the updated figures and then examine some expert opinions.
This short commentary by Eric Sprott and David Franklin was posted on the sprottgroup.com Internet site yesterday...and is definitely worth reading.
Turkish prime minister Recep Tayyip Erdoğan has arrived in Washington, D.C. for a much-anticipated summit with President Barack Obama. The timing of the visit -- amid reports of chemical weapons usage in Syria and an attack against a Turkish border town by alleged Syrian agents -- will make it hard to talk about anything other than the civil war in Syria.
But some members of Congress want to draw attention to a less-obvious issue. Last month, a bipartisan group of 47 members of Congress penned a letter to Secretaries John Kerry and Jack Lew calling for clarification on Turkey's financial dealings with Iran. Under the initiative of South Carolina Republican Representative Jeff Duncan, the letter expressed deep concerns over Turkey's gold dealings that have helped Iran skirt Western sanctions designed to curtail Tehran's illicit nuclear program.
This short essay was posted in The Atlantic early yesterday morning EDT...and I thank Manitoba reader Ulrike Marx for her first of three stories in a row in today's column.
The leader of South Africa's biggest platinum mining union threatened on Friday to bring Africa's No. 1 economy "to a standstill" and demanded a meeting with President Jacob Zuma, ramping up the rhetoric in an 18-month labor crisis.
The rand, which tumbled to a four-year low against the dollar on Thursday on fears of a strike at Anglo American Platinum (Amplats), extended its slide on concerns about further disruptions to an already struggling economy.
The currency fell as low as 9.4334, its lowest since April 2009 when emerging markets were still reeling from the effects of the global financial crisis.
A protest strike called for Friday by at least two AMCU officials failed to materialize as all workers reported for the morning shift as normal.
This Reuters story was filed from Rustenburg, South Africa...and posted on their Internet site early yesterday morning EDT.
It could have posed as a model scheme to curtail gold imports. In order to stifle India’s appetite for gold, the government has introduced inflation index bonds. The first tranche amounting to around $364 million (R20 billion) is to be introduced on June 4.
Inflation Indexed Bonds (IIBs) are a new category of debt instruments to be introduced in India, where the coupon and principal amount would be linked to the rate of wholesale price inflation with a lag of four months. The authorities have said the objective of introducing such bonds is to channelise savings into productive sources of instruments from unproductive ones like gold.
Slowly but surely, there seems to be an anti-gold campaign that is at play in India. The concerted effort by the Indian government to discredit gold by imposing several curbs, and channelise consumers away from the precious metal, indicates a desperation that has not gone unnoticed by savvy investors.
This very interesting article was filed from Mumbai...and posted on the mineweb.com Internet site yesterday. It's Ulrike's third and final offering in today's column.
Alasdair Macleod chatted with John Butler, author of The Golden Revolution and the Amphora Report investment newsletter.
John briefly details his motives for writing his book, before the discussion moves onto the latest knockdown in gold against the current news stories regarding global demand.
From weak hands to strong, from West to East, from paper to physical, once a floor is found and the physical supply becomes tight, both Alasdair and John agree that the market will then start to clear at higher prices.
This 27-minute podcast, posted on the goldmoney.com Internet site on Thursday, is certainly worth your time. I thank Elliot Simon for digging it up for us.
Fund manager John Butler, interviewed by Max Keiser on "The Keiser Report" on the Russia Today network, remarks that it's "naive," amid all the acknowledged manipulation of markets going on today, to think that the gold market is not being manipulated too. Keiser's interview with Butler begins at the 14:25 mark in the video posted at the youtube.com Internet site...and I thank Chris Powell for wordsmithing the above preamble.
The long-lasting imprint from FDR’s famous “Hundred Days” did not stem from the bank holiday, national industrial recovery act, the farm adjustment act, the Tennessee Valley Authority, or the public works administration.
Instead, it is lodged in the footnotes of standard histories; namely, FDR’s April 1933 order confiscating every ounce of gold held by private citizens and businesses throughout the United States. Shortly thereafter he also embraced the Thomas Amendment, giving him open-ended authority to drastically reduce the gold content of the dollar; that is, to trash the nation’s currency.
These actions did not constitute merely a belated burial of the “barbarous relic.” In the larger scheme of monetary history, they marked a crucial tipping point. They initiated a process of monetary deformation that led straight to Nixon’s abomination at Camp David, Greenspan’s panic at the time of the 1998 Long-Term Capital Management crisis, and the final destruction of monetary integrity and financial discipline during the BlackBerry Panic of 2008.
This longish absolute must read is an excerpt from David Stockman's book "The Great Deformation: The Corruption of Capitalism in America". It was posted on the mises.org Internet site on Thursday...and I thank Elliot Simon for today's last story.